Admiral returns to course amid optimism about car insurance prices

Admiral Group has defied a listless FTSE 100, after a City broker praised Britain’s largest car insurance provider.

Berenberg analysts believe that despite the nervousness of investors that prices for motor insurance will drop, the City does not realize how far Admiral has surpassed the rest in terms of pricing. The analysts believe there are many reasons to be optimistic about the future.

Thomas Bateman of Berenberg believes that Admiral’s pricing is underappreciated. This is despite the fact that the company increased prices by 37 percent over the last year. This was ahead of the average market price. He also believes that this gives Admiral “spread to cut prices while maintaining excellent margins, and still growing market share”.

Bateman says that the company will “strongly increase its market share” in this year. He also expects a “strong rise in earnings”, which he believes will reach “over £760 million pre-tax profits for the next two-year period, which would be record earnings”. Admiral shares rose 125p or 4.9 percent to £26.98.

Imperial Brands joined Admiral on the Footsie leaderboard, with a gain of 48p or 2.8 percent, to £17.401/2, after the cigarette manufacturer launched the second £550million tranche of its share-buyback programme.

The fall in sterling from its seven-month-highs has boosted dollar-earners like Hikma Pharmaceuticals. AstraZeneca have both risen by 54 1/2p or 2.9 percent to £19.10, and by 254p or 2.5 percent to £104.50.

Analysts at RBC, who think that the high-street stalwart can generate moderate growth, and has a progressive policy of cash returns, advised investors to also invest in Marks & Spencer. The shares of the company, which have risen by more than 60% since last year’s end, rose another 3 1/2p or 1.4% to 246 1/4p.

The FTSE 100 managed to escape the red and gain 9.49 points or 0.1 percent to 7,669.23. The FTSE 250, which is more focused on the UK, fell 71.69 or 0.4 percent to 19,530.09.

The uncertainty surrounding St James’s Place and the troubled Wealth Manager was revealed by a further 16 3/4p or 3.6 percent drop in its stock price to 453 1/4p. Analysts at HSBC worry that negative sentiment towards the company could hinder its ability to attract new clients in the near future. The group has already set aside £426million to refund customers who complained about their service.

Entain was close behind with its sixth consecutive session of negative earnings. The shares of the gambling company fell by 12 1/4p or 1.6 percent to 734 3/4p after it was revealed that reforms could cost Ladbrokes’ owner £40,000,000 in lost earnings.

The session was brutal for Ferrexpo. It fell 18 3/4p or 26.8% to a low of 51 1/2p, an eight-year record, after the Ukrainian iron producer announced that a supplier filed to open creditor’s protection proceedings against their Ukrainian unit, claiming a $58,000 outstanding bill.

Breedon shares dropped from record highs of 375p after UBS changed its “buy” to “hold” recommendation. Analysts said that there is less upside for the shares now when they consider the likely lower returns in the coming years.

Nanoco Group, a Manchester-based company that creates quantum dots, has given small-cap investors a reason to cheer after it announced it would return £33,000,000 to shareholders through a combination tender offer and share buyback. This money comes from the £150 Million Nanoco won after a lengthy legal battle against Samsung. The shares closed at 20 1/4p up 1p or 5.7 percent.

The shares rose 10p or 5.6% to 190p after a trading update by Ramsdens Holdings revealed that the profits of its precious metals division continued to improve. They increased by around 20 percent in the five-month period ending at the end February.

RA International received applause when it announced that the Africa- and Middle East focused company, which offers construction and support services to the region, returned to profitability last year. It was its first profitable year in 2020. The shares rose by half a penny or 5.4 percent to 9 3/4p.

After LoopUp announced its plans to terminate its listing on Aim (London’s junior stock market), the value of its shares was reduced by almost three quarters.

Aim, the video conferencing software company, which was one of Britain’s “pandemic winners” after millions of workers switched from working in the office to home-based work, is quitting Aim, having “exhaustively explored” all options.

It said that by taking LoopUp private and raising money, it would be able to capitalise on its rapidly growing cloud telephony multinational business.

Steve Flavell, the co-chief executive of the company, and Michael Hughes, the other, stated in a statement that: “At this point in our journey to growth, taking the business public will give us the flexibility to invest for our future growth. This is underpinned by an important near-term cash infusion.”

London has suffered another blow with the loss of LoopUp. The company cited difficulties listed companies face in raising funds on public markets. The shares that were initially listed on Aim at 100p each in August 2016, have fallen by 71.7 percent, or 1 1/2p.